Kainos to float on London Stock Exchange
Kainos, the UK-based provider of IT services, consulting and software solutions, announces the successful pricing of its initial public offering (the “IPO”) and the placing of 37,691,763 ordinary shares at 139 pence per share (the “Offer Price”) (the “Offer”). Kainos has applied for admission of its issued share capital of up to 117,957,307 ordinary shares (“Ordinary Shares”) to the premium listing segment of the Official List of the FCA and to trading on the Main Market of the London Stock Exchange. It is expected that dealings will commence at 8.00am on 10 July 2015.
Based on the Offer Price and the existing issued share capital of Kainos of 116,039,360 Ordinary Shares (the “Existing Issued Share Capital”), the market capitalisation of Kainos is approximately £161.3 million. The Offer is expected to raise £52.4 million of gross proceeds for selling shareholders, which includes QUBIS Limited (“QUBIS”), former Group employees, Kainos’ Executive Directors and other individuals (together the “Selling Shareholders”).
On Admission QUBIS will hold approximately 16.3% of the Existing Issued Share Capital of Kainos and Directors and other senior managers of the Group will hold approximately 37.4% of the Existing Issued Share Capital of Kainos.
A small primary offering of up to 1,160,393 new Ordinary Shares is being made available to employees of the Group based in the United Kingdom, the Republic of Ireland and Poland (the “Employee Offer”) to enable current employees of Kainos based in these jurisdictions to purchase shares at the Offer Price. This Employee Offer will close at 12.00 p.m. on 9 July 2015. The proceeds of the Employee Offer will be retained by the Group.
Kainos also intends to issue shares to UK-based, qualifying employees under the terms of a SIP scheme which would result in the issue of up to 757,554 further Ordinary Shares prior to Admission.
Kainos will therefore have up to 117,957,307 Ordinary Shares in issue and a market capitalisation of approximately £164.0 million.
Dealings in the Ordinary Shares are expected to commence on the London Stock Exchange at 8.00am on 10 July 2015 under the ticker “KNOS” (ISIN: GB00BZ0D6727).
Shareholders holding shares representing in aggregate approximately 49.3% of the Existing Issued Share Capital have entered into lock-up and orderly market arrangements with Investec Bank plc (“Investec”) and Kainos following Admission.
Investec is acting as sole sponsor, financial adviser, bookrunner, underwriter and broker to Kainos.
Full details of the Offer will be included in the Prospectus, which is expected to be published and made available on the Group’s website later today.
Kainos is a high-growth UK-based provider of IT services, consulting and software solutions. The Group was founded in April 1986 as a joint venture between ICL and QUBIS. The Group specialises across multiple sectors in the development of digital technology solutions; software design and agile software development; third-party software integration and implementation services; technology support services; and related ancillary services such as project management.
The Group is headquartered in Belfast, Northern Ireland and has approximately 730 staff across its seven offices.
The Group operates through three divisions:
o Digital Services, which delivers full system developments of customised online digital solutions, principally for UK Government departments and agencies, along with private sector organisations;
o Evolve, the UK market leader in the digitisation of patient notes in the Acute sector of the NHS; and
o Workday Implementation Services, the only boutique partner for Workday, Inc. (“Workday”) headquartered in the UK, responsible for implementing Workday’s innovative Software-as-a-Service platform for enterprise customers.
The Directors believe that each of the Group’s divisions operates in markets that are experiencing long-term structural and technological change, where the Group has an opportunity to maintain its current leadership position. Kainos enjoys market leading positions in each of its divisions and has a proven track record of building strong, long-term relationships with its clients.
The Group’s services and products target a large addressable market:
o For Digital Services, the Directors believe that there are approximately 275 government to citizen transactions that have been identified and prioritised by the UK Government which would represent a market opportunity for Kainos of more than £1.0 billion over the next five years;
o For Evolve, the Directors believe that approximately 110 healthcare organisations in the UK and Ireland are likely to choose an electronic document and records management (“EDRM”) solution by 2020, providing for a total market opportunity of approximately £200 million over the next five years; and
o For Workday Implementation Services, the Directors believe that Kainos is well placed to benefit from Workday’s expansion in the Enterprise Resource Planning (“ERP”) market, estimated at being $35.4 billion by 2018.
Kainos’ customer base includes:
o Digital Services: UK Government departments and agencies such as the Driver and Vehicle Licencing Agency and the Department for Work and Pensions as well as a number of private sector organisations;
o Evolve: NHS Trusts such as Royal Brompton and Harefield NHS Foundation Trust and Bradford Teaching Hospitals NHS Foundation Trust and Lancashire Teaching Hospitals NHS Foundations Trust; and
o Workday Implementation Services: well-known global organisations such as Diageo and Travelex.
· Kainos has a proven financial track record. For the year ended 31 March 2015, the Group generated revenue of £60.8 million and profit before tax of £11.8 million.
· The Directors believe that Admission will enhance the Group’s public profile and status, create a liquid market in the Ordinary Shares and assist in the incentivisation and retention of key management and employees.
Brendan Mooney, Chief Executive Officer of Kainos, commented: “All of us at Kainos are delighted with the response we have seen to our IPO. The recognition investors have shown towards our business, our services and our leading position stands as testament to the hard work and commitment of our international team. The task for us now is simple – to maintain our growth trajectory. We have a clearly defined strategy in place to see that happen and are looking forward to life as a listed company.”